Domestic dissent undermines Abe’s Moscow energy courtship

By Jiao Kun Source:Global Times Published: 2013-5-7 22:43:01

Japanese Prime Minister Shinzo Abe recently visited the Kremlin, the first official visit by a Japanese prime minister within a decade. It was especially eye-catching that as many as 120 businessmen went along with Abe.

For those who are aware of Japan's economic situation, this was nothing surprising. The Japanese economy, although the third largest one in the world, is actually walking on the edge of a cliff. The country's trade deficit in 2012 reached 7 trillion yen (then $78.3 billion). Its current account is in the black at the moment, but analysts predict it may swing back to deficit within this year.

Japan's soaring trade deficit began after the Fukushima nuclear disaster in 2011. In order to tackle the energy shortage after the shutdown of nuclear plants, Japan has been forced to purchase expensive natural gas from the Middle East.

Since the beginning of this year, the Abe government has taken a loose monetary policy, which has led to severe yen depreciation. This may mean even higher costs for Japan's energy purchases in the future.

Russia may become a lifesaver. Russia is currently the world's second largest natural gas exporter, and most of its gas fields are located in the Far East region, quite close to Japan.

Russia may also become an investment destination and target market for Japanese companies. Japan's domestic market has been slowly shrinking for nearly two decades, due to an aging population. For Japanese firms, it is certainly alluring if Russia needs foreign capital, equipment and technology.

Russian President Vladimir Putin sees energy export as Russia's lifeline and is expanding markets eastward. The Far East region, with abundant resources but a small population and a lack of capital and technology, has been a major area of worry. Russia is seeking joint exploitation of this region with various countries.

Those businessmen who visited Russia with Abe may feel pleased. But domestically, a nationalistic mentality is threatening their hopes.

For years, the two countries have been tangled in disputes over the South Kuril Islands, known as the Northern Territories in Japan. It seems that the territorial issue has been prioritized before other issues, including economic topics.

In the 1950s, the Soviet Union decided to return two smaller islets among the islands so as to seek the normalization of its relationship with Japan. However, Japan has been much tougher. A few pragmatic politicians once planned to accept Soviet Union's proposal, but most denied the offer.

In the wake of Abe's latest Russia trip, nationalistic feelings have soared again in Japan.

In Japan's public opinion sphere, Russia's wish to export energy to Japan and introduce capital from it is seen as an SOS sent by this giant state amid its economic slowdown, and therefore Abe should not make any compromise over the territorial issue until Putin bows his head. The hope of even cheaper US gas also empowers critics against Russia. Some nationalists even believe Abe should make joint containment of China a prerequisite to cooperation with Russia.

These nationalists have ignored the fact that Japan's economic predicament is far more pressing than Russia's.

Japan is merely an additional option for Russia, whereas Russia's resources and market are of great significance to Japan. Moreover, Japan is relatively isolated in Asia, and may face simultaneous pressure from Russia, China and South Korea.